Exhibit 99.2
Financial Highlights Boise and Subsidiaries
| | | | | | | | 2003 | |
| | 2000 | | 2001 | | 2002 | | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Year | |
| | (millions, except per-share amounts) | |
Sales and Income | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Sales | | $ | 7,806.7 | | $ | 7,422.2 | | $ | 7,412.3 | | $ | 1,853.2 | | $ | 1,929.0 | | $ | 2,110.6 | | $ | 2,352.3 | | $ | 8,245.1 | |
Income from operations | | 444.0 | | 81.1 | | 118.3 | | 1.7 | | 22.7 | | 76.7 | | 46.7 | | 147.8 | |
Net income (loss) before cumulative effect of accounting changes | | $ | 178.6 | | $ | (42.5 | ) | $ | 11.3 | | $ | (18.7 | ) | $ | (4.0 | ) | $ | 32.9 | | $ | 6.9 | | $ | 17.1 | |
Cumulative effect of accounting changes, net of income tax | | — | | — | | — | | (8.8 | ) | — | | — | | — | | (8.8 | ) |
Net income (loss) | | $ | 178.6 | | $ | (42.5 | ) | $ | 11.3 | | $ | (27.5 | ) | $ | (4.0 | ) | $ | 32.9 | | $ | 6.9 | | $ | 8.3 | |
Net income (loss) per common share | | | | | | | | | | | | | | | | | |
Diluted before cumulative effect of accounting changes | | $ | 2.73 | | $ | (.96 | ) | $ | (.03 | ) | $ | (.38 | ) | $ | (.12 | ) | $ | .48 | | $ | .05 | | $ | .07 | |
Cumulative effect of accounting changes | | — | | — | | — | | (.15 | ) | — | | — | | — | | (.15 | ) |
Diluted | | $ | 2.73 | | $ | (.96 | ) | $ | (.03 | ) | $ | (.53 | ) | $ | (.12 | ) | $ | .48 | | $ | .05 | | $ | (.08 | ) |
Cash dividends paid per common share | | $ | .60 | | $ | .60 | | $ | .60 | | $ | .15 | | $ | .15 | | $ | .15 | | $ | .15 | | $ | .60 | |
| | | | | | | | | | | | | | | | | |
Financial Condition | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Capital expenditures | | 485.8 | | 380.0 | | 266.2 | | 48.5 | | 69.4 | | 44.5 | | | | | |
Total assets | | 5,266.9 | | 4,934.0 | | 4,947.4 | | 4,970.9 | | 4,989.9 | | 5,066.8 | | 7,376.3 | | | |
| | | | | | | | | | | | | | | | | |
Long-term debt, less current portion | | $ | 1,714.8 | | $ | 1,062.9 | | $ | 1,387.4 | | $ | 1,472.7 | | $ | 1,494.4 | | $ | 1,517.1 | | $ | 1,999.9 | | | |
Current portion of long-term debt and short-term borrowings | | 93.3 | | 440.0 | | 153.7 | | 105.5 | | 76.5 | | 85.1 | | 88.2 | | | |
Adjustable conversion-rate equity security units | | — | | 172.5 | | 172.5 | | 172.5 | | 172.5 | | 172.5 | | 172.5 | | | |
Guarantee of ESOP debt | | 107.9 | | 80.9 | | 51.4 | | 51.4 | | 40.5 | | 40.5 | | 19.1 | | | |
Total debt | | $ | 1,916.0 | | $ | 1,756.3 | | $ | 1,765.0 | | $ | 1,802.1 | | $ | 1,783.9 | | $ | 1,815.2 | | $ | 2,279.7 | | | |
| | | | | | | | | | | | | | | | | |
Shareholders’ equity | | $ | 1,757.0 | | $ | 1,578.4 | | $ | 1,399.5 | | $ | 1,372.1 | | $ | 1,384.2 | | $ | 1,411.4 | | $ | 2,298.1 | | | |
Shareholders’ equity per common share | | $ | 28.85 | | $ | 25.10 | | $ | 21.59 | | $ | 21.17 | | $ | 21.23 | | $ | 21.26 | | $ | 24.47 | | | |
| | | | | | | | | | | | | | | | | |
Financial Ratios | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Return on sales | | 2.3 | % | (.6 | )% | .2 | % | (1.5 | )% | (.2 | )% | 1.6 | % | .3 | % | .1 | % |
Debt to equity | | 1.09:1 | | 1.11:1 | | 1.26:1 | | 1.31:1 | | 1.29:1 | | 1.29:1 | | .99:1 | | | |
Debt to total capitalization | | 52.0 | % | 52.7 | % | 55.8 | % | 56.8 | % | 56.3 | % | 56.3 | % | 49.6 | % | | |
| | | | | | | | | | | | | | | | | |
Other Information | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Effective tax (provision) benefit rate | | (39.0 | )% | 12.1 | % | 192.8 | % | 36.2 | % | 36.6 | % | (27.6 | )% | (27.7 | )% | (11.5 | )% |
Number of common shares outstanding at the end of the period (thousands) | | 57,337 | | 58,062 | | 58,284 | | 58,292 | | 58,314 | | 59,549 | | 87,137 | | | |
Average number of common shares (thousands) | | | | | | | | | | | | | | | | | |
Basic | | 57,288 | | 57,680 | | 58,216 | | 58,289 | | 58,300 | | 58,411 | | 65,313 | | 60,093 | |
Diluted(2) | | 61,413 | | 61,797 | | 62,090 | | 61,880 | | 61,844 | | 62,697 | | 70,205 | | 64,180 | |
Common stock price | | | | | | | | | | | | | | | | | |
High | | $ | 43.94 | | $ | 38.00 | | $ | 38.81 | | $ | 28.15 | | $ | 26.30 | | $ | 29.20 | | $ | 32.89 | | | |
Low | | $ | 21.75 | | $ | 26.99 | | $ | 19.61 | | $ | 20.72 | | $ | 21.48 | | $ | 21.48 | | $ | 26.96 | | | |
Close | | $ | 33.63 | | $ | 34.01 | | $ | 25.22 | | $ | 21.85 | | $ | 23.90 | | $ | 27.60 | | $ | 32.86 | | | |
(1) For the first and second quarters of 2003 and the years ended December 31, 2001, 2002, and 2003, the computation of diluted net loss per share was antidilutive; accordingly, diluted net loss per share was calculated using the average basic shares outstanding.
Summary of Operations Boise and Subsidiaries
| | 2002 | |
Quarterly Results by Segment (Unaudited)(1) | | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Year | |
| | (millions, except per-share amounts) | |
Sales by Segment | | | | | | | | | | | |
Boise Office Solutions, Contract | | $ | 884.5 | | $ | 855.5 | | $ | 899.9 | | $ | 905.9 | | $ | 3,545.8 | |
Boise Office Solutions, Retail | | — | | — | | — | | — | | — | |
| | 884.5 | | 855.5 | | 899.9 | | 905.9 | | 3,545.8 | |
Boise Building Solutions | | 560.2 | | 669.9 | | 671.5 | | 568.2 | | 2,469.7 | |
Boise Paper Solutions | | 456.0 | | 481.6 | | 485.2 | | 455.3 | | 1,878.0 | |
Other | | 18.3 | | 19.4 | | 19.4 | | 18.9 | | 76.0 | |
| | 1,919.0 | | 2,026.4 | | 2,075.9 | | 1,948.3 | | 7,969.5 | |
Intersegment eliminations | | (130.8 | ) | (138.4 | ) | (140.7 | ) | (147.4 | ) | (557.2 | ) |
Trade sales | | $ | 1,788.2 | | $ | 1,888.0 | | $ | 1,935.3 | | $ | 1,800.8 | | $ | 7,412.3 | |
Income (Loss) by Segment | | | | | | | | | | | |
Boise Office Solutions, Contract | | $ | 37.4 | | $ | 23.4 | | $ | 29.8 | | $ | 32.4 | | $ | 123.0 | |
Boise Office Solutions, Retail | | — | | — | | — | | — | | — | |
| | 37.4 | | 23.4 | | 29.8 | | 32.4 | | 123.0 | |
Boise Building Solutions | | 8.8 | | 14.0 | | 14.5 | | 2.3 | | 39.7 | |
Boise Paper Solutions | | (10.8 | ) | 8.8 | | 17.2 | | 23.4 | | 38.6 | |
Corporate and Other | | (12.8 | ) | (37.9 | ) | (15.9 | ) | (15.3 | ) | (81.8 | ) |
| | 22.6 | | 8.4 | | 45.6 | | 42.9 | | 119.5 | |
Interest expense | | (33.3 | ) | (33.3 | ) | (32.1 | ) | (33.0 | ) | (131.7 | ) |
Income (loss) before income taxes | | (10.7 | ) | (24.9 | ) | 13.5 | | 9.9 | | (12.2 | ) |
Income tax (provision) benefit | | 4.1 | | 28.2 | | (5.0 | ) | (3.7 | ) | 23.5 | |
Net income (loss) | | $ | (6.6 | ) | $ | 3.2 | | $ | 8.5 | | $ | 6.2 | | $ | 11.3 | |
Net income (loss) per common share | | | | | | | | | | | |
Diluted | | $ | (.17 | ) | $ | .00 | | $ | .09 | | $ | .05 | | $ | (.03 | ) |
| | 2003 | |
| | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Year | |
| | (millions, except per-share amounts) | |
Sales by Segment | | | | | | | | | | | |
Boise Office Solutions, Contract | | $ | 938.3 | | $ | 904.9 | | $ | 934.1 | | $ | 964.7 | | $ | 3,741.9 | |
Boise Office Solutions, Retail | | — | | — | | — | | 283.2 | | 283.2 | |
| | 938.3 | | 904.9 | | 934.1 | | 1,247.9 | | 4,025.1 | |
Boise Building Solutions | | 574.6 | | 692.8 | | 828.1 | | 776.3 | | 2,871.9 | |
Boise Paper Solutions | | 468.2 | | 459.4 | | 474.2 | | 450.9 | | 1,852.6 | |
Other | | 19.4 | | 18.8 | | 20.6 | | 19.1 | | 77.9 | |
| | 2,000.5 | | 2,075.9 | | 2,256.9 | | 2,494.2 | | 8,827.5 | |
Intersegment eliminations | | (147.3 | ) | (146.9 | ) | (146.3 | ) | (141.8 | ) | (582.4 | ) |
Trade sales | | $ | 1,853.2 | | $ | 1,929.0 | | $ | 2,110.6 | | $ | 2,352.3 | | $ | 8,245.1 | |
Income (Loss) by Segment | | | | | | | | | | | |
Boise Office Solutions, Contract | | $ | 20.7 | | $ | 23.9 | | $ | 31.0 | | $ | 33.9 | | $ | 109.4 | |
Boise Office Solutions, Retail | | — | | — | | — | | 6.1 | | 6.1 | |
| | 20.7 | | 23.9 | | 31.0 | | 40.0 | | 115.5 | |
Boise Building Solutions | | (8.5 | ) | 9.8 | | 56.4 | | 37.6 | | 95.4 | |
Boise Paper Solutions | | (0.7 | ) | 1.0 | | 0.2 | | (14.4 | ) | (13.9 | ) |
Corporate and Other | | (8.7 | ) | (9.9 | ) | (10.5 | ) | (16.1 | ) | (45.2 | ) |
| | 2.8 | | 24.9 | | 77.1 | | 47.1 | | 151.8 | |
Interest expense | | (32.2 | ) | (31.1 | ) | (31.7 | ) | (37.6 | ) | (132.5 | ) |
Income (loss) before income taxes and cumulative effect of accounting changes | | (29.4 | ) | (6.2 | ) | 45.4 | | 9.5 | | 19.3 | |
Income tax (provision) benefit | | 10.7 | | 2.3 | | (12.5 | ) | (2.6 | ) | (2.2 | ) |
Income (loss) before cumulative effect of accounting changes | | (18.7 | ) | (4.0 | ) | 32.9 | | 6.9 | | 17.1 | |
Cumulative effect of accounting changes, net of income tax | | (8.8 | ) | — | | — | | — | | (8.8 | ) |
Net income (loss) | | $ | (27.5 | ) | $ | (4.0 | ) | $ | 32.9 | | $ | 6.9 | | $ | 8.3 | |
Net income (loss) per common share | | | | | | | | | | | |
Diluted net income (loss) before cumulative effect of accounting changes | | $ | (.38 | ) | $ | (.12 | ) | $ | .48 | | $ | .05 | | $ | .07 | |
Cumulative effect of accounting changes | | (.15 | ) | — | | — | | — | | (.15 | ) |
Diluted | | $ | (.53 | ) | $ | (.12 | ) | $ | .48 | | $ | .05 | | $ | (.08 | ) |
(1) Columns may not add due to rounding.
Statistical Review / 2002
| | 2002 | |
| | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Year | |
| | | | | | | | | | | |
Boise Office Solutions | | | | | | | | | | | |
Sales by Product Line (millions) | | | | | | | | | | | |
Office supplies and paper | | $ | 549 | | $ | 531 | | $ | 545 | | $ | 556 | | $ | 2,181 | |
Technology products | | 250 | | 245 | | 263 | | 264 | | 1,022 | |
Office furniture | | 85 | | 80 | | 92 | | 86 | | 343 | |
| | | | | | | | | | | |
Sales by Geography (millions) | | | | | | | | | | | |
United States | | $ | 686 | | $ | 665 | | $ | 707 | | $ | 701 | | $ | 2,759 | |
International | | 198 | | 191 | | 193 | | 205 | | 787 | |
| | | | | | | | | | | |
Sales Growth | | | | | | | | | | | |
Sales growth | | (9 | )% | (1 | )% | 6 | % | 6 | % | 0 | % |
Same-location sales growth | | (8 | )% | (1 | )% | 6 | % | 5 | % | 0 | % |
| | | | | | | | | | | |
Margins (percentage of sales) | | | | | | | | | | | |
Gross profit margin | | 23.6 | % | 23.1 | % | 22.4 | % | 23.5 | % | 23.1 | % |
Operating profit | | 4.2 | % | 2.7 | % | 3.3 | % | 3.6 | % | 3.5 | % |
| | | | | | | | | | | |
Boise Building Solutions | | | | | | | | | | | |
Sales Volumes | | | | | | | | | | | |
Plywood (thousand square feet) (3/8” basis) | | 440,525 | | 462,648 | | 460,952 | | 424,078 | | 1,788,203 | |
OSB (thousand square feet) (3/8” basis) (1) | | 100,161 | | 98,273 | | 107,176 | | 111,076 | | 416,686 | |
Particleboard (thousand square feet) (3/4” basis) | | 49,749 | | 51,182 | | 47,617 | | 40,675 | | 189,223 | |
Lumber (thousand board feet) | | 95,911 | | 108,455 | | 99,858 | | 91,057 | | 395,281 | |
LVL (hundred cubic feet) | | 17,895 | | 20,844 | | 20,879 | | 17,925 | | 77,543 | |
I-joists (thousand equivalent lineal feet) | | 34,995 | | 47,102 | | 46,954 | | 36,714 | | 165,765 | |
Engineered wood products (millions) | | $ | 60 | | $ | 76 | | $ | 77 | | $ | 61 | | $ | 274 | |
Building materials distribution (millions) | | $ | 375 | | $ | 464 | | $ | 470 | | $ | 387 | | $ | 1,696 | |
(1) Includes 100% of the sales volume of Voyageur Panel, of which we own 47%.
Selected Prices (average net selling prices) | | | | | | | | | | | |
Plywood (thousand square feet) (3/8” basis) | | $ | 231 | | $ | 238 | | $ | 227 | | $ | 220 | | $ | 229 | |
OSB (thousand square feet) (3/8” basis) | | 131 | | 136 | | 127 | | 128 | | 130 | |
Particleboard (thousand square feet) (3/4” basis) | | 230 | | 248 | | 254 | | 223 | | 239 | |
Lumber (thousand board feet) | | 481 | | 465 | | 470 | | 446 | | 466 | |
LVL (hundred cubic feet) | | 1,491 | | 1,485 | | 1,498 | | 1,454 | | 1,483 | |
I-joists (thousand equivalent lineal feet) | | 896 | | 886 | | 890 | | 872 | | 886 | |
| | | | | | | | | | | |
Boise Paper Solutions | | | | | | | | | | | |
Sales Volumes (thousands of short tons) | | | | | | | | | | | |
Uncoated free sheet | | 355 | | 370 | | 364 | | 336 | | 1,425 | |
Containerboard | | 160 | | 167 | | 168 | | 159 | | 654 | |
Newsprint | | 84 | | 111 | | 110 | | 101 | | 406 | |
Other | | 49 | | 62 | | 37 | | 31 | | 179 | |
| | 648 | | 710 | | 679 | | 627 | | 2,664 | |
| | | | | | | | | | | |
Corrugated containers (millions of square feet) | | 1,061 | | 1,065 | | 1,205 | | 1,132 | | 4,463 | |
| | | | | | | | | | | |
Selected Prices (average net selling prices per short ton) | | | | | | | | | | | |
Uncoated free sheet | | $ | 712 | | $ | 712 | | $ | 722 | | $ | 746 | | $ | 722 | |
Containerboard | | 327 | | 332 | | 351 | | 361 | | 343 | |
Newsprint | | 368 | | 349 | | 367 | | 371 | | 363 | |
Statistical Review / 2003
| | 2003 | |
| | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Year | |
Boise Office Solutions, Contract | | | | | | | | | | | |
Sales by Product Line (millions) | | | | | | | | | | | |
Office supplies and paper | | $ | 567 | | $ | 539 | | $ | 555 | | $ | 572 | | $ | 2,233 | |
Technology products | | 277 | | 275 | | 280 | | 293 | | 1,125 | |
Office furniture | | 94 | | 91 | | 99 | | 100 | | 384 | |
| | | | | | | | | | | |
Sales by Geography (millions) | | | | | | | | | | | |
United States | | $ | 709 | | $ | 682 | | $ | 712 | | $ | 720 | | $ | 2,823 | |
International | | 229 | | 223 | | 222 | | 245 | | 919 | |
| | | | | | | | | | | |
Sales Growth | | | | | | | | | | | |
Sales growth | | 6 | % | 6 | % | 4 | % | 6 | % | 6 | % |
Same-location sales growth | | 6 | % | 6 | % | 4 | % | 4 | % | 5 | % |
| | | | | | | | | | | |
Margins (percentage of sales) | | | | | | | | | | | |
Gross profit margin | | 23.8 | % | 23.8 | % | 24.2 | % | 25.4 | % | 24.3 | % |
Operating profit | | 2.2 | % | 2.6 | % | 3.3 | % | 3.5 | % | 2.9 | % |
| | | | | | | | | | | |
Boise Office Solutions, Retail | | | | | | | | | | | |
Sales by Product Line (millions) | | | | | | | | | | | |
Office supplies and paper | | $ | — | | $ | — | | $ | — | | $ | 92 | | $ | 92 | |
Technology products | | — | | — | | — | | 161 | | 161 | |
Office furniture | | — | | — | | — | | 30 | | 30 | |
| | | | | | | | | | | |
Sales by Geography (millions) | | | | | | | | | | | |
United States | | $ | — | | $ | — | | $ | — | | $ | 283 | | $ | 283 | |
International | | — | | — | | — | | — | | — | |
| | | | | | | | | | | |
Margins (percentage of sales) | | | | | | | | | | | |
Gross profit margin | | — | | — | | — | | 24.5 | % | 24.5 | % |
Operating profit | | — | | — | | — | | 2.2 | % | 2.2 | % |
| | | | | | | | | | | |
Boise Building Solutions | | | | | | | | | | | |
Sales Volumes | | | | | | | | | | | |
Plywood (thousand square feet) (3/8” basis) | | 466,537 | | 476,896 | | 499,323 | | 447,724 | | 1,890,480 | |
OSB (thousand square feet) (3/8” basis) (1) | | 106,581 | | 112,652 | | 111,775 | | 101,388 | | 432,396 | |
Particleboard (thousand square feet) (3/4” basis) | | 41,192 | | 38,609 | | 36,524 | | 36,296 | | 152,621 | |
Lumber (thousand board feet) | | 93,524 | | 93,113 | | 90,522 | | 86,895 | | 364,054 | |
LVL (hundred cubic feet) | | 20,685 | | 25,063 | | 28,431 | | 24,115 | | 98,294 | |
I-joists (thousand equivalent lineal feet) | | 40,534 | | 53,271 | | 60,275 | | 45,869 | | 199,949 | |
Engineered wood products (millions) | | $ | 68 | | $ | 85 | | $ | 96 | | $ | 80 | | $ | 329 | |
Building materials distribution (millions) | | $ | 391 | | $ | 505 | | $ | 603 | | $ | 549 | | $ | 2,048 | |
(1) Represents 100% of the sales volume of Voyageur Panel, of which we own 47%.
Selected Prices (average net selling prices) | | | | | | | | | | | |
Plywood (thousand square feet) (3/8” basis) | | $ | 220 | | $ | 228 | | $ | 291 | | $ | 334 | | $ | 267 | |
OSB (thousand square feet) (3/8” basis) | | 141 | | 165 | | 258 | | 309 | | 217 | |
Particleboard (thousand square feet) (3/4” basis) | | 219 | | 230 | | 243 | | 254 | | 236 | |
Lumber (thousand board feet) | | 412 | | 400 | | 446 | | 468 | | 431 | |
LVL (hundred cubic feet) | | 1,453 | | 1,447 | | 1,440 | | 1,516 | | 1,463 | |
I-joists (thousand equivalent lineal feet) | | 867 | | 861 | | 865 | | 905 | | 874 | |
| | | | | | | | | | | |
Boise Paper Solutions | | | | | | | | | | | |
Sales Volumes (thousands of short tons) | | | | | | | | | | | |
Uncoated free sheet | | 353 | | 351 | | 353 | | 339 | | 1,396 | |
Containerboard | | 158 | | 154 | | 170 | | 168 | | 650 | |
Newsprint | | 106 | | 89 | | 101 | | 120 | | 416 | |
Other | | 33 | | 31 | | 47 | | 35 | | 146 | |
| | 650 | | 625 | | 671 | | 662 | | 2,608 | |
| | | | | | | | | | | |
Corrugated containers (millions of square feet) | | 1,122 | | 1,151 | | 1,204 | | 1,114 | | 4,591 | |
| | | | | | | | | | | |
Selected Prices (average net selling prices per short ton) | | | | | | | | | | | |
Uncoated free sheet | | $ | 747 | | $ | 734 | | $ | 713 | | $ | 690 | | $ | 721 | |
Containerboard | | 341 | | 347 | | 342 | | 319 | | 337 | |
Newsprint | | 374 | | 399 | | 412 | | 405 | | 397 | |
